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Calculate the corresponding interest rate from a given duration to another duration

This calculator helps you convert a known monthly, quarterly, half-yearly or yearly interest rate into equivalent interest rates for other durations assuming both compounding and simple interest. In other words, it helps you, e.g. convert a monthly interest rate into an equivalent yearly interest rate for simple and compound interest

How to use this calculator

  1. Select the interest duration for the interest rate that you know

  2. Enter the interest rate for that frequency

Frequently asked questions

 

What does this interest rate calculator do?

Sometimes it is important to convert the interest rate for a known period into the corresponding interest rate with another frequency, e.g. when comparing interest rates of 2 different durations, calculating investment growth, or the interest due on a loan.

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This calculator helps you convert either simple or compound interest rate into the corresponding rate for another duration. The cases currently covered are as follows:

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Case I: Monthly

  1. Monthly interest to quarterly interest

  2. Monthly interest to half-yearly interest

  3. Monthly interest to yearly interest

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Case II: Quarterly

  1. Quarterly interest to monthly interest

  2. Quarterly interest to half-yearly interest

  3. Quarterly interest to yearly interest

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Case III: Half-yearly

  1. Half-yearly interest to monthly interest

  2. Half-yearly interest to quarterly interest

  3. Half-yearly interest to yearly interest

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Case IV: Yearly

  1. Yearly interest to monthly interest

  2. Yearly interest to quarterly interest

  3. Yearly interest to half-yearly interest

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Which are the important interest rate terms I need to know?

Compound interest: Compound interest is the amount of money earned on a given amount of money with compounding effects. E.g. if ₹1,00,000 is invested at 10% a year for 5 years, then the total interest year is ₹61,051 vs ₹50,000 for simple interest. However, in the case of simple and compound interest, the interest in the first year would be ₹10,000 as no compounding takes place in the first year in this example. Compounding can happen in any time period, e.g. daily, weekly, monthly etc, and this will affect the future value.

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Simple interest: Simple interest is the amount of money earned on a given amount of money without compounding effects. E.g. if ₹1,00,000 is invested at 10% a year for 5 years, then the interest per year is ₹10,000. In the case of compound interest, the interest in the first year would also be ₹10,000 but would be larger for other years due to compounding effects.

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How is the simple interest rate converted from one frequency to another?

In the case of simple interest, we just need to perform a simple multiplication or division in order to convert the interest rate from one frequency to another, e.g. to convert a yearly 12% interest rate into its monthly or daily value, simply divide by 12 and 365 respectively. If the daily or monthly simple rate was available, then to calculate the corresponding yearly simple interest rate, we would multiply by 365 and 12 respectively. The formula to calculate the simple interest rate for different periods is given above.

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How is compound interest rate converted from one frequency to another?

In the case of compound interest, we just need to perform a slightly more complex calculation which requires calculating roots or exponents depending on what we want to calculate. If we have a yearly interest rate of 12%, then the corresponding monthly interest rate, assuming compounding effects, would be calculated by taking the 12th root of (1 + 12%) and subtracting 1 from it. This would then be multiplied by 100 to get the corresponding monthly interest rate in %. The formula for this is given above. If we have a monthly interest rate of 1% and want to find out what the equivalent yearly interest rate would be, then we would calculate the exponent. (1 + 1%)^12. The formula to calculate the compound interest rate for different periods is given above.

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What are the equivalent interest rates for other durations if we have 1% compounded monthly?

A monthly compound interest of 1%, translates into 3.0301% on a quarterly basis, 6.1250% on a half-yearly basis and 12.6825% on a yearly basis. If the interest did not compound, i.e. it is simple interest, then the corresponding interest rates for quarterly, half-yearly and yearly periods would be 3%, 6%, and 12% respectively.

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How do I use this interest rate convert?

Instructions to use this interest rate converter are provided above.

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